Showing posts with label _United States. Show all posts
Showing posts with label _United States. Show all posts

EPA study confirms that fracking is not responsible for widespread water contamination

On June 4, 2015, the Environmental Protection Agency (EPA) released its highly anticipated study on the impact of hydraulic fracturing on drinking water. The EPA has been working on this study for a number of years. In the study, the EPA concluded that hydraulic fracturing is not the cause of widespread contamination of drinking water.

The EPA’s report is one of many studies over the past couple of years to conclude that hydraulic fracturing has minimal impact on groundwater. For instance, the United States Department of Energy released a study that tracked hydraulic fracturing fluids over a twelve month period. The report found that the fracking fluid did not contaminate the groundwater. Other studies reaching this conclusion include reports by: the United States Geological Survey, the Government Accountability Office, the Massachusetts Institute of Technology, and the Groundwater Protection Council. According to the EPA, its study is the most comprehensive study conducted on the subject. In fact, the EPA relied on more than 950 different sources.

The EPA’s study acknowledged that there have been some cases of wells leaking fluids; however, the report concluded that this concern could be addressed strengthening wells and ensuring that wastewater is properly disposed.

The EPA’s study will not be finalized until it is reviewed by the Science Advisory Board and the public has had an adequate opportunity to review and comment. Instructions on how to submit commits will be published today.

Read the report.

This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713 651 3662) and Johnjerica Hodge (johnjerica.hodge@nortonrosefulbright.com or 713 651 5698) from Norton Rose Fulbright's Energy Practice Group.
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United States Congress weighs the "Frack Pack"

Currently, the United States Congress is considering a group of bills aimed at extending the ability of the federal government to regulate hydraulic fracturing. The bills, commonly referred to as the “Frack Pack,” have been sponsored by Democrats in the Senate and House of Representatives. In response, Republicans in the Senate and House of Representatives have proposed legislation that would limit the federal government’s authority to regulate hydraulic fracturing.

One of the bills, the Fracturing Responsibility and Awareness of Chemicals Act of 2015 (FRAC), would empower the United States Environmental Protection Agency (EPA) to regulate hydraulic fracturing. Specifically, FRAC would remove the hydraulic fracturing exclusion from the Safe Drinking Water Act (SDWA). Currently, the SDWA does not apply to hydraulic fracturing unless the fluids used in the fracking process include diesel fuels. Additionally, FRAC would impose heightened disclosure requirements. For instance, FRAC would require companies to disclose the types of chemicals used in their fracking process. That said, FRAC contains a provision that would provide the companies with trade secret protection.

Yet another bill currently before Congress is the Safe Hydration is an American Right in Energy Development Act of 2015 (SHARED). This bill would add a provision to the SDWA, mandating that oil and gas operators implement groundwater testing before drilling operations begin. Additionally, SHARED would require operators to conduct monitoring throughout drilling operations. Under SHARED, the test results would be listed on the internet.

Additionally, Congress is considering the Focused Reduction of Effluence and Stormwater runoff through Hydrofracking Environmental Regulation Act of 2015 (FRESR). Under FRESR, oil and gas operations would no longer be exempt from the Clean Water Act’s (CWA) stormwater permitting requirements. If enacted, oil and gas operators would be required to obtain a permit permitting stormwater run-off through each stage of the fracking process.

Congress is also evaluating the Bringing Reductions to Energy’s Airborne Toxic Health Effects (BREATHE) Act of 2015. BREATHE is directed at the Clean Air Act (CAA) and would add hydrogen sulfide as a hazardous air pollutant (HAP). In addition, the bill would add oil and gas wells as a major source of hydrogen sulfide. If oil and gas wells are listed as a major source of hydrogen sulfide, the EPA would have the ability to establish thresholds for the amount of hydrogen sulfide that could be emitted from the wells. Moreover, BREATHE would also repeal the provision of the CAA that prohibits the aggregation of oil and gas wells and compressor stations when determining whether an activity constitutes a major source.

Democrats in the House of Representatives have also sponsored the Protect Our Public Lands Act (POPLA). If enacted, POPLA would ban any hydraulic fracturing operations on land leased by the federal government. However, drilling operations in operation when the bill is enacted would be permitted to continue until the lease expired or was adjusted.

On the other end of the spectrum lies the Fracturing Regulations are Effective in State Hands Act of 2015 (FRESH) and the Protecting States Rights to Promote American Energy Security Act of 2015 (PSRPAES). Under FRESH, states would have sole authority to regulate hydraulic fracturing. In fact, FRESH would authorize states to regulate hydraulic fracturing on federal lands. PSRPAES targets the Mineral Leasing Act and would bar the Department of Interior from regulating hydraulic fracturing if the state in which the drilling operations will occur already has regulates hydraulic fracturing. Indeed, PSRPAES directs the Secretary of the Interior to defer to state regulations irrespective of whether the regulations are less restrictive than federal rules or differ from federal regulations.

This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713 651 3662) and Johnjerica Hodge (johnjerica.hodge@nortonrosefulbright.com or 713 651 5698) from Norton Rose Fulbright's Energy Practice Group.
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Senators propose bill to penalize use of older rail cars

After the Lac-Mégantic derailment, several groups have advocated for the strengthening of regulations governing the transportation of crude oil by rail. A group of Democrats in the United States Senate have responded by proposing a new bill—the Hazardous Materials Rail Transportation Safety Improvement Act of 2015. The new bill contains a number of measures targeted at reducing the use of older rail cars.

Specifically, the new bill would impose a fee of $175 each time a DOT-111 railcar is used to ship crude oil. In its current form, the fee would escalate each year. The bill would also grant tax credit to parties to upgrade their rail cars to comply with the latest standards promulgated by the United States Department of Transportation (DOT). The bill specifies that money collected from violations would be reserved for the cleanup costs associated with derailments as well as the training of first-responders. In addition, the bill would use the collected funds to hire additional train inspectors and fund the tax credits. Furthermore, the bill contains provisions mandating that the DOT provide first responders with real-time information with respect to the transportation of crude oil by rail and implement more stringent maintenance requirements for tracks. The bill also provides for studies of the methods first responders use when faced with derailments.

The sponsors of the bill are Senators Ron Wyden, Chuck Schumer, Sherrod Brown, Mark Warner, Bob Casey, and Dianne Feinstein. According to Senators Wyden and Brown, the DOT’s attempts to increase the safety of the transportation of crude oil by rail have fallen short of achieving the goal of safe transportation of crude oil by rail. This new bill, in Senator Wyden’s opinion, represents a new approach to convincing companies to switch to safer rail cars.

Read the bill.

This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713 651 3662) and Johnjerica Hodge (johnjerica.hodge@nortonrosefulbright.com or 713 651 5698) from Norton Rose Fulbright's Energy Practice Group.
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Department of Transportation publishes heightened standards for railcars transporting crude oil

On May 1, 2015, the United States Department of Transportation (DOT) released its final rules governing the transportation of oil by rail. The new rules apply to railcars transporting high-hazard flammable materials and largely correlate with the heightened standards applicable in Canada. The new rules are set to go into effect on October 1, 2015.

The DOT made several changes to the final rules in light of the comments it received in response to the proposed rule. For example, the DOT extended the deadline by which DOT-111 railcars must be retrofitted or replaced to three years rather than two years. As for the CPC-1232 railcars, companies will have five years to retrofit or replace those cars if the railcars do not have insulating jackets that satisfy the heightened requirements.

After October 1, 2015, all new railcars must comply with the DOT-117 standard. To satisfy the DOT-117 standard, railcars must have thicker shells, insulated jackets, updated pressure relief valves, and improved thermal protection. In addition, trains with at least 70 railcars that are carrying Class 3 flammable liquids, the most volatile category, must now have pneumatic braking systems before January 1, 2021. Trains merely transporting other flammable liquids only need to install the braking systems by 2023. The new rules also establish a speed limit of 50 mph. If the railcar doesn’t comply with the updated standards set forth in the rules, the railcar must comply with a 40-mph speed limit in urban areas.

Thus far, the new rules have received a significant amount of criticism. Environmentalists have argued that the rules are not sufficiently stringent. A number of environmental groups advocated for the immediate ban of the older DOT-111 railcars. Members of the oil and gas industry have argued that the cost to comply with the rules is excessive and that the deadline for retrofitting the railcars could result in a shortage of railcars. Others have argued that the new braking systems will not help in reducing accidents. The final rules will certainly be challenged. Some commentators have suggested that the new rules would not withstand judicial scrutiny, despite the favorable standard of review, because the DOT lacks supporting authority for the requirements.

Read the final rules.
This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713 651 3662) and Johnjerica Hodge (johnjerica.hodge@nortonrosefulbright.com or 713 651 5698) from Norton Rose Fulbright's Energy Practice Group.
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Lawsuit challenging fracking disclosure requirements stayed

As discussed in a previous post, several environmental groups have sued the United States Environmental Protection Agency (EPA) in the United States District Court for the District of Columbia. The plaintiffs alleged that the EPA failed to properly respond to their 2012 petition that requested that the EPA issue a rule requiring companies engaging in hydraulic fracturing to disclose chemicals used in their drilling operations. According to the plaintiffs, the Administrative Procedure Act required the EPA to respond to their petition within sixty days.

On Friday, April 24th, the parties filed a joint motion to stay the lawsuit, which the district court approved. In the joint motion, the EPA stated that it would respond to the plaintiff’s petition later this year. Specifically, the EPA agreed to respond before October 30, 2015. The district court has scheduled a status hearing on November 13, 2015. The parties initiated settlement negotiations shortly after the lawsuit was filed.

The plaintiffs’ primary dispute with the EPA revolves around the Toxics Release Inventory (TRI) and the Emergency Planning and Community Right-to-Know Act (EPCRA). The EPCRA empowers the EPA to mandate that the oil and gas industry disclose any chemicals used in their drilling operations. Currently, the oil and gas industry is not subject to the TRI’s requirements. In 2011, the EPA released a proposal to increase the number of industries subject to the TRI disclosure requirements but decided to not subject the oil and gas industry to the disclosure requirements.

Read the joint motion to stay the proceedings.
This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713 651 3662) and Johnjerica Hodge (johnjerica.hodge@nortonrosefulbright.com or 713 651 5698) from Norton Rose Fulbright's Energy Practice Group.
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Opposition to federal fracking rules grows

Earlier this year, the Department of Interior’s Bureau of Land Management (BLM) released its final version of rules governing hydraulic fracturing on federal land. As discussed in a previous post, these rules will not only impose heightened requirements on drilling operations but also increase the reporting duties for drilling operators. Shortly after the BLM released its proposal, the Independent Petroleum Association of America (IPAA) and Western Energy Alliance (WEA) sued the BLM in Wyoming to challenge the proposed rules. The IPAA and WEA argued that the BLM’s rules are unnecessary because states adequately regulate hydraulic fracturing. The IPAA and WEA have also alleged that the BLM’s final rules are unsubstantiated.

A second lawsuit was later filed by Wyoming against the BLM. In its petition for review of the BLM’s fracking rules, Wyoming stated that the BLM exceeded its authority and its fracking rules would hamper state regulation of hydraulic fracturing. Specifically, Wyoming has argued that the BLM’s authority under the Mineral Leasing Act and the Federal and Policy and Management Act do not authorize the agency to enact the hydraulic fracturing rules. According to Wyoming, the BLM’s rules also conflict with the Safe Water Drinking Act, which grants states the exclusive right to regulate underground injections. North Dakota later joined Wyoming’s petition for review. North Dakota has stated that it is one of the largest oil and gas producers in the United States and the BLM’s rules inhibit the state’s ability to regulate hydraulic fracturing in the state.

The opposition to the United States Bureau of Land Management’s (BLM) rules for hydraulic fracturing is growing. Colorado has also joined the lawsuit challenging the BLM’s new rules for hydraulic fracturing. Cynthia Coffman, the Attorney General for Colorado, describes the BLM’s rules as an encroachment on an area that has historically been regulated by states. Coffman further noted that Colorado has sufficient regulations governing hydraulic fracturing. In addition, Coffman stated that although hydraulic fracturing should be regulated, the BLM lacked the authority to enact the rules.

Read the amended petition for review.

This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713 651 3662) and Johnjerica Hodge (johnjerica.hodge@nortonrosefulbright.com or 713 651 5698) from Norton Rose Fulbright's Energy Practice Group.
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Bureau of Land Management releases new federal regulations for hydraulic fracturing

In 2012, the Department of the Interior’s Bureau of Land Management (BLM) circulated a proposed rule governing the use of hydraulic fracturing on federal land. That proposal garnered a significant amount of interest and public comment. Today, the BLM released a final version of those regulations aimed specifically at hydraulic fracturing. The BLM has been working on these regulations since President Obama’s first term.

Under the new regulations, operators are required to conduct a mechanical integrity test before engaging in hydraulic fracturing operations. Moreover, if an operator encounters cementing problems with a well, the operator is required to show the BLM that the problem has been remedied. Operators are also required to monitor annulus pressure while hydraulic fracturing operations are ongoing. In addition, any fluids recovered during fracking operations must be contained in an above-ground storage tank. The rules contains a few limited exceptions; however, the exceptions have to be approved on a case-by-case basis. Additionally, the new regulations require all wells to satisfy best practices standards. The regulations authorize government employees to inspect the cement barriers of wells.

The new regulations also heighten reporting requirements. Oil and gas companies will be required to disclose the chemical composition of their fracking fluids. Companies must make this disclosure within thirty days of finishing a particular drilling operation. The new rules make an exception for information qualifying as a trade secret; however, companies must submit an affidavit to prove trade secret status. Companies are still permitted to use FracFocus to make their disclosures. The BLM noted that it is negotiating a memorandum of understanding (MOU) with the Ground Water Protection Council (GWPC), the organization that manages FracFocus. Under the MOU, the GWPC will notify the BLM each time chemical disclosures are uploaded on the site. The rules require companies with operations on federal land to follow state and federal disclosure requirements; however, if the state regulation is stricter, the state can request a variance that requires operators to comply with the stricter state rule. Companies will also have to submit additional information to the BLM concerning wellbore geology, fault and fracture locations, water depths, the volume of fluids used, and the direction and length of fractures.

According to the BLM, the new regulations are necessary because of the dramatic growth in hydraulic fracturing operations throughout the country. The BLM has indicated that it believes the new rules will ensure that wells are constructed in a manner that will protect water supplies and that fluids involved in hydraulic fracturing operations are utilized so as to avoid any negative impact on the environment. In addition, the BLM has expressed a desire that the new regulations improve public disclosure of the chemicals used in hydraulic fracturing and increase the cohesion between federal and state standards.

The new rules are set to take effect in ninety days after it is published in the Federal Register. The impact of the rule is debatable as the new regulations only apply to oil and gas wells on public lands, and the majority of fracking is conducted on private property. That said, commentators have suggested that these new regulations will further stymie the growth of hydraulic fracturing on public lands. In fact, the BLM estimated that it will cost operators $11,400 per well to comply with the new regulations. The Independent Petroleum Association of America and Western Energy Alliance have already filed suit to challenge the regulations.

Read the new regulations.

This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713 651 3662) and Johnjerica Hodge (johnjerica.hodge@nortonrosefulbright.com or 713 651 5698) from Norton Rose Fulbright's Energy Practice Group.
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Changes coming to FracFocus

FracFocus is widely used by the oil and gas industry for chemical disclosures. Thus far, at least twenty states rely on the website to store its disclosures. In fact, a version of FracFocus is also used in five provinces in Canada. Earlier today, the Ground Water Protection Council (GWPC) and the Interstate Oil and Gas Compact Commission (OGCC) announced a number of changes to its disclosure system. The GWPC and OGCC have stated that these changes will increase the quality of FracFocus’s performance as well as its versatility.

One change will be the addition of self-checking features to FracFocus. The program will detect potential errors in disclosures and correct those errors before a disclosure is submitted. The GWPC and OGCC hope that this program will decrease the likelihood of human errors. Among the errors that the program will check is to ensure the Chemical Abstract Service numbers are in the correct format.

FracFocus will also adopt the systems approach for disclosure reports. According to the GWPC and OGCC, the systems approach will improve the transparency of chemical reporting by permitting companies to disclose a more accurate list of chemicals used in hydraulic fracturing operations. The GWPC and OGCC hope that the increased transparency will lead to fewer trade secret lawsuits.

Additionally, FracFocus will adjust its search capabilities to improve the public’s ability to use the website. For example, the program will feature pulldown menus and additional search fields. FracFocus will also increase the number of formats for its records. Currently, FracFocus only provides records in PDF.

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Regulation to watch for in 2015

It appears that the federal government intends to pass a number of regulations regarding the oil and gas industry this year. Several federal agencies are currently in various stages of the rulemaking process. Members of the oil and gas industry should anticipate rules or proposals from the following agencies: the Environmental Protection Agency (EPA), the Department of the Interior (DOI), the Bureau of Land Management (BLM) and the Department of Transportation (DOT).

The EPA intends to announce regulations that will reduce the volatile organic compound and methane emissions associated with the oil and gas industry. These new regulations should be announced at some point during the summer of 2015. Commentators have suggested that the EPA will propose that the industry reduce emissions by at least 45% by 2025. In addition, the EPA will circulate Control Techniques Guidelines to assist states that have been unable to meet the ozone limits.

The EPA is also expected to update the Renewable Fuel Standards (RFS). The RFS sets forth the percentage of gasoline that must consist of renewable fuels. The Renewable Fuel Program was established by the Energy Policy Act of 2005 and mandates that renewable fuel be incorporated into gasoline on an increasing basis. In 2007, the Energy Policy Act was amended by the Energy Independence and Security Act of 2007 to increase the amount of renewable fuel to be incorporated.

The BLM has indicated that it will issue several new rules this year. The BLM will likely finalize a proposed rule it released in 2013. The new rule would mandate that companies engaging in hydraulic fracturing on federal or tribal lands disclose the composition of their fracking fluids, manage flowback waters and satisfy heightened standards for well construction. Under the proposed rule, companies would not be forced to disclose trade secrets. This rule has garnered significant criticism from the oil and gas industry. Many in the industry have complained of the significant cost that will be imposed by the rule. Commentators expect the BLM to finalize the rule in early 2015. Commentators also anticipate that the BLM will issue rules governing flaring and venting. These regulations will target methane emission. Additionally, the BLM will issue a notice of proposed rulemaking concerning the royalty rate for new Federal onshore competitive oil and gas leases. The BLM is considering whether public interest requires a higher royalty rate.

The DOI is also expected to circulate proposed rules on several issues this year. In response to the Deepwater Horizon accident, the DOI will issue rules to govern blowouts. The DOI has not released a great deal of information on this issue. However, commentators have suggested that the rules will regulate well design, casing, cementing, drilling margins, well control, monitoring and subsea containment. These rules are expected to be released in early 2015. The DOI has also indicated that it will issue rules governing drilling in the Arctic region. The OMB is currently reviewed the DOI’s proposed rules for the Arctic region.

In addition, the DOT will likely finalize its rules governing crude oil rail transportation this year. Last year, the DOT issued proposed rules imposing heightened standards on the quality of tank cars permitted to transport crude oil. The proposed rules also impose, among other things, speed limits and notification requirements on crude oil shippers.
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Attempt to increase federal regulation of fracking rebuffed in the US Senate

Lately, the oil and gas industry has faced a number of challenges. For example, environmental groups have sued federal and state agencies to contest their regulatory policies for drilling operations, particularly hydraulic fracturing. In addition, environmental groups have sponsored campaigns in several states in an attempt to convince voters to adopt hydraulic fracturing bans. That said, yesterday, the oil and gas industry successfully rebuffed one of the latest challenges to hydraulic fracturing and secured a major victory in the US Senate.

The Senate voted to reject a proposed measure that would have altered the current regulatory regime by increasing federal oversight of hydraulic fracturing. Under the current regime, the Safe Drinking Water Act’s Underground Injection Control (UIC) program governs the disposal of wastewater. However, the UIC does not regulate hydraulic fracturing. In 2005, Congress adopted an energy bill in which it confirmed that regulatory regime.

If the measure had passed, the Environmental Protection Agency would likely have been empowered to regulate hydraulic fracturing. The measure was sponsored by Senator Kirsten Gillibrand, the senator for New York. The proposal was rejected by a combination of Republicans and Democrats. Whereas sixty-three senators voted against the proposal, only thirty-five senators voted in favor of it. Some commentators have suggested that the proposed measure would have disrupted the current balance between state and federal regulation of drilling operations.

Read the proposed measure.

This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713 651 3662) and Johnjerica Hodge (johnjerica.hodge@nortonrosefulbright.com or 713 651 5698) from Norton Rose Fulbright's Energy Practice Group.
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Environmental group sues federal agencies for fracking-related documents

Earlier this week, the Center for Biological Diversity (Center) filed suit in the United States District Court for the District of Columbia against the Bureau of Safety and Environmental Enforcement (BSEE) and the Bureau of Ocean Energy Management (BOEM).

The Center alleges that Defendants failed to comply with its request under the Freedom of Information Act (FOIA). In addition, the Center argues that it believes Defendants have issued permits to allow fracking in the Gulf of Mexico without proper evaluation.

The Center alleges that it sent Defendants a FOIA request for its records concerning any hydraulic fracturing activities in the Gulf of Mexico. Specifically, the Center requested any information detailing the extent of fracking operations in the Gulf of Mexico, Defendants’ role in the permit approval process, and whether Defendants had engaged in any environmental analysis before approving the permits. Defendants notified the Center that they were reviewing the FOIA request; however, the Center alleges that Defendants did not comply with their obligations under FOIA.

The Center contends that Defendants’ failure to provide it with the requested information has not only harmed its interests but also the interests of the public-at-large. According to the Center, hydraulic fracturing should not be permitted in the Gulf of Mexico because it is a fragile ecosystem. If it is given the requested information, the Center argues that it will educate the public on the fracking operations in the Gulf of Mexico. The Center requests that the Court find that Defendants violated FOIA and order Defendants to respond to its FOIA request.

This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713 651 3662) and Johnjerica Hodge (johnjerica.hodge@nortonrosefulbright.com or 713 651 5698) from Norton Rose Fulbright's Energy Practice Group.
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Twelve senators weigh in on rules for fracking on public lands

In a letter dated September 30, 2014, twelve Senate Democrats urged the implementation of “the strongest possible safeguards” for the use of hydraulic fracturing on Federal lands. The letter comes on the heels of the Department of the Interior sending rule(s) for “governing the practice of hydraulic fracturing on public lands” to the Office of Management and Budget (“OMB”) for finalizing.

While the letter does not have the level of specificity one would expect the eventual rule(s) to have, the Senators urged the inclusion of three requirements they deem “imperative”: 

  1. “[r]obust requirements for public disclosure of all [fracking fluid] chemicals and additives; 
  2. a free, searchable public database containing such disclosures; and 
  3. “[s]trong and consistent requirements for well construction and integrity and wastewater management for every well drilled on public lands . . . .” In the Senators’ words, the “rule should serve to build on existing state standards in a way that ensures there is a floor of protection in all states.”
The text of the rule(s) has not yet been released. However, you can review the May 2013 draft of the rule(s).”
This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713 651 3662) and Jim Hartle (james.hartle@nortonrosefulbright.com or 713 651 5695) from Norton Rose Fulbright's Energy Practice Group.
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Oil rail safety transport improvements will be costly

Proposed federal regulations on oil rail transportation will be costly to implement. Responding to concerns about the increase of oil rail transport and several high profile accidents, the US Department of Transportation (“DOT”) has proposed new rules to strengthen the safety standards for the rail transport of crude oil and ethanol. These improvements include new tank car standards, oil spill response plans and requirements for securing unattended rail cars.

Over a 20-year period, the Pipeline and Hazardous Materials Safety Administration (“PHMSA”) estimates that it will cost billions of dollars for stakeholders to enact the improvements necessary to comply with the proposed regulations. Though rail carriers and rail car manufacturers and owners likely will shoulder most of the costs, oil and gas companies will experience rising costs in higher purchase prices, lease rates and additional fees as the rail industry seeks to offset its higher operating costs. Further, the proposed regulations include requirements for lower speed limits and rail routing risk analyses, which could lead to transportation delays and longer delivery routes.

Currently, the proposed rules do not require oil and gas producers to “stabilize,” or remove natural gas liquids, the crude oil from the Bakken Shale before shipping it by rail. However, because the DOT has concluded that Bakken crude oil has high volatility, analysts predict that a stabilization requirement may be forthcoming. Stabilizing crude oil prior to rail transport will significantly costs for oil and gas producers.


Read more about new federal oil rail safety regulations.
This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713 651 3662) and Katie McNearney (katie.mcnearney@nortonrosefulbright.com or 713 651 5698) from Norton Rose Fulbright's Energy Practice Group.
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Web seminar: Legal lessons learned in shale plays in North America

With North America leading the way in shale oil and gas production, interest is mounting globally in the unconventional hydrocarbon sector. On Wednesday, September 17th , we will host a web seminar on Legal lessons learned in shale plays in North America, which will look at the key legal issues that have arisen in North America related to shale development, the lessons learned, and the implications for countries where shale development is still in the early stages.

This web seminar will be broadcast in two separate sessions for Asia/Australia audiences (session 1) and Europe/South Africa audiences (session 2) respectively. If you are unable to register for a session, a recording of the web seminar which will be made available after the event.

Session 1: Wednesday, September 17
  • 9:00 am – 10:15 am Hong Kong, Singapore 
  • 11:00 am – 12:15 pm Sydney, Melbourne 
To learn more about the seminar and register please access the following link: Legal lessons learned in shale plays in North America – Session 1

Session 2: Wednesday, September 17, 2014
  • 6:00 am – 7:15 am Los Angeles 
  • 7:00 am – 8:15 am Calgary 
  • 8:00 am – 9:15 am Houston 
  • 9:00 am – 10:15 am New York 
  • 2:00 pm – 3:15 pm London 
  • 3:00 pm – 4:15 pm Cape Town 
To learn more about the seminar and register please access the following link: Legal lessons learned in shale plays in North America - Session 2
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EPA proposes revisions to greenhouse gas reporting rules for petroleum and natural gas systems

The U.S. Environmental Protection Agency (EPA) has proposed revisions to its greenhouse gas reporting rules for the oil and gas industry. Published in the March 10, 2014 edition of the Federal Register, the proposal addresses the petroleum and natural gas systems source category (40 CFR 98, Subpart W) and the general provisions (40 CFR 98, Subpart A).

The proposed changes include revisions to “certain calculation methods, monitoring and data reporting requirements, terms and definitions, and technical and editorial errors…” as well as proposing “confidentiality determinations for new or substantially revised data elements” in the rules.

The revised reporting rule eliminates the Best Available Monitoring Method (BAMM) provision which currently allows the use of alternative engineering calculations or supplier data to determine greenhouse gas emissions.

According to the EPA, the “proposed revisions to calculation methods would provide greater flexibility and potentially reduce burden to facilities,…and increase clarity and congruency of calculation and reporting requirements…” by increasing options for calculation of emissions from various sources, such as compressors, natural gas pneumatic device venting, acid gas removal vents, dehydrators, liquids unloading, gas well completions, workovers, venting and flaring, storage tanks, and natural gas distribution sources.

Separate reporting of emissions of each of the six key greenhouse gases (carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride) in metric tons would be required – rather than simply reporting the total carbon dioxide-equivalent emissions.

These proposed revisions are open for public comment until April 24, 2014. If finalized, these revisions would become effective on January 1, 2015.

This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.
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EPA request for information related to hydraulic fracturing study to close November 15

The deadline for submitting information to the US Environmental Protection Agency (EPA) for its ongoing study on hydraulic fracturing is November 15, 2013.

Although such information was originally due on April 30, 2013, EPA extended the deadline to “ensure that [it] is up-to-date on evolving hydraulic fracturing practices and technologies.”

Notice of the deadline extension was published in the Federal Register. It is expected that the extension will not delay release of the final report in 2014.

Although EPA is conducting a “thorough literature search,” it solicited additional information from the public in an attempt to also gather and review “studies or other primary technical sources that are not available through the open literature.”

Specifically, EPA asked “interested persons” to provide “scientific analyses, studies, and other pertinent scientific information, preferably information which has undergone scientific peer review.”

EPA has stated that it will consider all submissions but that preference will be given to peer-reviewed data and literature sources.

EPA issued a progress report on its hydraulic fracturing study in December 2012, after holding five technical roundtables in November 2012.

The progress report stated that EPA is conducting 18 research projects on the relationship between hydraulic fracturing and drinking water and reviewing data on fracking fluids, well construction, chemical spills, and water quality from wells around the country.

The progress report is discussed in our February 27, 2013 blog post, EPA Technical Roundtables Concerning Potential Impacts of Hydraulic Fracturing on Drinking Water Resources.

This article was prepared by Lauren Brogdon (lauren.brogdon@nortonrosefulbright.com or 713 651 5375) from Norton Rose Fulbright's Energy Practice Group.
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Michigan couple file lawsuit to prevent BLM lease auction

The Department of Interior’s Bureau of Land Management (BLM) plans to hold a competitive oil and gas lease auction of approximately 27,000 acres in the Allegan State Game Area in Michigan on September 12, 2013. Plaintiffs who reside on 40-acres in Allegan County adjacent to the Game Area, created “a conservation easement on their property in order to protect groundwater springs, three spring-fed streams, the headwaters of Bear Creek (a tributary of the Kalamazoo River), a wetland, a significant vernal pool, 22 bird species designated by the Michigan Department of Natural Resources…, 70 other bird species, and state-designated threatened reptiles.” In their Complaint for Declaratory and Injunctive Relief (see attached Complaint), the Plaintiffs allege that the two Environmental Assessments (EA 634 and EA 1662) prepared by the BLM and the Findings of No Significant Impact “are based, in part, on inaccurate assumptions, serious misconceptions and erroneous information.” Among the issues raised are:
  • The EAs rest on the faulty assumption that oil and gas development in the Game Area will never occur on surface lands.
  • The EAs fail to analyze likely impacts from the forecast of up to 300 million gallons of water used in probable fracking operations.
  • The EAs fail to analyze where the water will come from and where the waste water will be disposed.
  • There is no discussion on any environmental effects of these withdrawals and disposals.
  • “Neither EA discusses the probable scenario of the need for using over 20 million gallons for each lateral leg of fracking production wells, which can result in cumulative water consumption of more than one billion gallons of water permanently withdrawn from the water cycle for each fracking production well.”
  • There is no discussion on effects on existing water wells used for residential and agricultural purposes.
  • The withdrawal assessment tool used does not consider the cumulative effects of high volume withdrawals.
  • The EAs were not made available to the public before finalization of the Findings of No Significant Impact.
The Plaintiffs further claim that the BLM violated the National Environmental Policy Act (NEPA) by authorizing the lease sales without preparing an Environmental Impact Statement (EIS).

The Center for Biological Diversity started its own legal effort to stop the leasing by filing a 60-day notice letter with the BLM, claiming that the BLM did not consider how fracking and drilling could harm endangered and threatened species in the Allegan State Game Area (see attached Notice). The Center for Biological Diversity was recently successful in a similar case in California. On March 31, 2013, in Center for Biological Diversity and Sierra Club v. The Bureau of Land Management and Ken Salazar, Secretary of the Department of the Interior, No. CV-11-06174 (N.D. Cal., December 8, 2011), the Court ruled that the BLM failed to conduct the “hard look” analysis required by NEPA by dismissing any development scenario involving hydraulic fracturing when used in combination with technologies such as horizontal drilling. The EA and the finding of no significant impact were found to be erroneous as a matter of law. See prior blog entitled “BLM Violated NEPA by Granting Leases without Evaluating Fracking Risks,” dated April 10, 2013.

Attached: (1) Complaint for Declaratory and Injunctive Relief and (2) Center for Biological Diversity’s Notice Letter to BLM

This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.
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House subcommittee meeting on "Protecting States' Rights to Promote American Energy Security Act"

On July 25, 2013, the U.S. House of Representatives’ Subcommittee on Energy and Mineral Resources held a hearing on the proposed "Protecting States' Rights to Promote American Energy Security Act" (H.R. 2728), one week after the act was introduced by Representative Bill Flores (R-Texas).

This proposed act would require the Department of the Interior to defer to state regulations, permitting, and guidance relating to hydraulic fracturing on federal lands within the state’s boundaries.

Testimony from representatives of the Alaska Oil and Gas Conservation Commission, the Texas Railroad Commission, and Utah’s Division of Oil, Gas and Mining expressed their support for the legislation, with each indicating that his/her state has done extremely well in regulating oil and gas exploration, development, and production and protecting the environment from operations such as hydraulic fracturing. 

Christi Craddick, the Commissioner for the Texas Railroad Commission, stated that “Texas has successfully regulated oil and gas production for almost 100 years and knows better than the federal government how to both serve and protect the unique interest of our state.” 

As for protecting ground water from hydraulic fracturing contamination, Ms. Craddick and Ms. Cathy P. Foerster from Alaska testified that neither state had documented instances of subsurface damage to underground sources of drinking water. 

The state representatives saw no need for “duplicative regulation of an already stringently regulated process” and that the “one size fits all” federal regulation mentality does not take into consideration each state’s unique geology, hydrology, and production issues. 

Speaking against the proposed act was Ms. Lois N. Epstein, with The Wilderness Society in Anchorage, Alaska, who stated that “it is essential that the federal government ensure adequate regulations [i.e., a baseline for hydraulic fracturing] are in place for industrial activities occurring on lands that it manages while providing states with the ability to exceed those requirements or to address atypical conditions.” Ms. Epstein saw the act as unconstitutional under the Supremacy Clause whereby state law is preempted to the extent it conflicts with federal law.

In addition to expressing her support for the act, Ms. Foerster addressed what she considered were “several misperceptions” expressed by Secretary of the Interior Sally Jewell in a hearing held on July 17, 2013. 

According to Ms. Forester. Secretary Jewell gave the “perception no national standard exists for hydraulic fracturing, that some states regulate properly but others use 30-year old technology, and that states that are just starting to deal with hydraulic fracturing have no place to go for help in establishing appropriate regulations.” 

Ms. Foerster pointed to the Interstate Oil and Gas Compact Commission (IOGCC) and STRONGER (State Review of Oil and Natural Gas Environment Regulations) as two groups who provide base sets of guidelines on a variety of oil and gas operations, including hydraulic fracturing, that assist states in setting standards for environmental protection consistent with the varying engineering and geologic needs of each state. 

These groups meet several times each year to ensure that their guidelines are up-to-date.

This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.
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US House subcommittees hear testimony on EPA hydraulic fracturing studies

On July 24, 2013, the Energy and Environment Subcommittees of the U.S. House of Representatives’ Committee on Science, Space and Technology held a joint hearing on “Lessons Learned: EPA’s Investigations of Hydraulic Fracturing.”

The hearing centered on questions about the EPA’s scientific processes for its study on the potential impacts of hydraulic fracturing on drinking water resources (final report due in 2014) and on questions raised about prior EPA studies of alleged water contamination in three locations (Pavillion WY, Parker County TX, and Dimock PA) in which the EPA, after receiving additional data, retreated from its original conclusions connecting hydraulic fracturing with contaminated groundwater.

In response to GOP subcommittee members’ expressed concerns about whether the EPA can complete an unbiased study, EPA representatives assured the members of Congress that the it is performing “a rigorous study” using “all proper procedures” to determine whether drinking water resources are being contaminated.

According to the EPA, strict quality assurance requirements are being followed and scientific integrity is being maintained during the peer review process.

Below is a brief summary of some of the witness testimony and comments from members of Congress.

Chris Stewart (R-Utah): “EPA’s recent announcement that it is walking away from its attempt to link hydraulic fracturing to groundwater issues in Pavillion, Wyoming is the most recent example of the agency employing a ‘shoot first, ask questions later’ policy toward unconventional oil and gas production… [W]e need to be vigilant in insuring that the Agency does not put the regulatory cart before the scientific horse.”

Cynthia Lummis (R-Wyo.): The report on contaminated groundwater in Pavillion, Wyoming “was so riddled with mistakes in well construction, errors in sampling techniques, and failures to follow protocol that even the USGS…could not replicate the results.” As for the current study being done, “[t]he study design is flawed and indicative of the Agency’s characteristic outcome-drive approach to hydraulic fracturing, where achieving desired conclusions takes precedent over basing those conclusions on the best available science.”

Lamar Smith (R-Texas): “[T]he EPA has failed to include a risk assessment as part of this study… The Agency should base its work on sound science rather than regulatory ambition.”

Suzanne Bonamici (D-Oregon) expressed her concern that the oil and gas “industry has a history of adopting environmental measures only after the drop of a [state or federal] regulatory gavel.”

Fred S. Hauchman, Ph.D., Director, Office of Science Policy, Office of Research and Development, U.S. EPA, assured the subcommittee that the study was being made in accordance with the Agency’s Scientific Integrity Policy and the six principles set out by Congress in requesting the study. These principles are: (1) use the best available science, (2) incorporate independent sources of information, (3) follow rigorous quality assurance procedures, (4) engage stakeholders at every level, (5) conduct the study transparently, and (6) commit to a thorough peer review. “This is not a quantitative risk analysis… We are completing a thorough analysis of available” information which is “highly desirable and useful.” He indicated that, while the study will provide context for potential risks, it will not set out a specific number or percentage nor will it include recommendations which are not within the scope of the study.

John C. Rogers, Associate Director of The Division of Oil, Gas and Mining (DOGM) for the State of Utah, stated that “[i]n all of the historical records of DOGM, there has never been a verified case of hydraulic fracturing causing or contributing to contamination of water resources.”

Brian Rahm, Ph.D., New York State Water Resources Institute, Cornell University, indicated that there are several lessons to be learned from the EPA’s Pavillion, Wyoming study: (1) the design and scope of gas development research needs to be carefully thought out, adhered to, and clearly communicated; (2) regional differences, such as geology and best practices, matter; (3) critical issues for consideration include well integrity (casing and cementing), management of waste materials, and disclosure of chemicals; and (4) oversight is required for construction of gas and water wells in formations that contain aquifers. Dr. Rahm also testified that these EPA studies cannot provide a general risk assessment of groundwater contamination because each study addresses specific complaints under specific geological and regulatory conditions. To make a general assessment requires data on a regional or national scale, not just from locations where complaints have been lodged or groundwater contamination has occurred. “You need to know when things go right” as well as what goes wrong to make a valid assessment. Because local characteristics vary, Dr. Rahm is in favor of regulation by the states.

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Proposed legislation would allow a state to control hydraulic fracturing on public lands within its borders

On July 18, 2013, U.S. Representative Bill Flores (R-Texas) proposed legislation (H.B. 2728 – Protecting States’ Rights to Promote American Energy Security Act) that would allow a state to control hydraulic fracturing on public lands within its borders if the state has hydraulic fracturing rules already in place. This legislation would bar the federal government from applying the Bureau of Land Management’s proposed regulations (see prior blog dated May 16, 2013, “BLM Releases revised proposed rules on hydraulic fracturing”) regardless of whether the state’s rules are duplicative, more or less restrictive, have different requirements or do not meet federal guidelines. Representative Flores stated that, with the states’ “long and successful track record of regulation oil and gas operations,” the bill halts “overreaching federal involvement in hydraulic fracturing operations” and “recognizes constitutionally protected states’ rights by continuing to let states effectively regulate themselves through a proven system that is working.” A hearing on this legislation will be held on July 25, 2013, before the U.S. House of Representatives’ Energy and Mineral Resources Subcommittee.

This proposed legislation came one day after Interior Secretary Sally Jewell testified before the House Natural Resources Committee on the operations, management and rulemakings of the Department. At the hearing, Secretary Jewell defended the proposed hydraulic fracturing regulations, stating that a “universal baseline” was needed to ensure the safe and responsible development of natural gas resources on federal lands because the current federal rules are outdated and states vary in their understanding of hydraulic fracturing, with many states having no rules relating to the process.
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